Important Keyword: GST RCM real estate, development rights GST, FSI GST RCM, Notification 05/2019 IGST, GST on land lease, promoter GST liability, IGST reverse charge real estate
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Table of Contents
[F. No. 354/32/2019- TRU]
Government of India
Ministry of Finance
(Department of Revenue)
New Delhi, the 29th March, 2019
Notification No. 05/2019 - Integrated Tax (Rate): Seeks to amend notification No. 10/2017- Integrated Tax (Rate) so as to specify services to be taxed under Reverse Charge Mechanism (RCM) as recommended by Goods and Services Tax Council for real estate sector.
GST: [TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]
GSR......(E).- In exercise of the powers conferred by sub-section (3) of section 5 of the IGST Act, 2017 (13 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No.10/2017- Integrated Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 685(E), dated the 28th June, 2017, namely:-
In the said notification, -
- in the Table, after serial number 6A and the entries relating thereto, the following serial number and entries shall be inserted, namely: -
| (1) | (2) | (3) | (4) |
| “6B | Services supplied by any person by way of transfer of development rights or Floor Space Index (FSI) (including additional FSI) for construction of a project by a promoter. | Any person | Promoter. |
| 6C | Long term lease of land (30 years or more) by any person against consideration in the form of upfront amount (called as premium, salami, cost, price, development charges or by any other name) and/or periodic rent for construction of a project by a promoter. | Any person | Promoter.”; |
- in the Explanation, after clause (h), the following clauses shall be inserted, namely: -
“(i) The term “apartment” shall have the same meaning as assigned to it in clause (e) under section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2017). - the term “promoter” shall have the same meaning as assigned to it in clause (zk) under section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2017).
- the term “project” shall mean a Real Estate Project (REP) or a Residential Real Estate Project (RREP);“
- the term “Real Estate Project (REP)” shall have the same meaning as assigned to it in in clause (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016).
- The term “Residential Real Estate Project (RREP)” shall mean a REP in which the carpet area of the commercial apartments is not more than 15 per cent. of the total carpet area of all the apartments in the REP.
- “floor space index (FSI)” shall mean the ratio of a building’s total floor area (gross floor area) to the size of the piece of land upon which it is built.”.
2. This notification shall come into force with effect from the 1st of April, 2019.
(Pramod Kumar)
Deputy Secretary to the
Government of India
Note: - The principal notification No. 10/2017 - Integrated Tax (Rate), dated the 28th June, 2017 was published in the Gazette of India, Extraordinary, vide number G.S.R. 685 (E), dated the 28th June, 2017 and was last amended by notification No. 30/2018 - Integrated Tax (Rate), dated the 31st December, 2018 vide number G.S.R. 1277 (E), dated the 31st December, 2018.
📚 Frequently Asked Questions (FAQs): Notification No. 05/2019 - Integrated Tax (Rate)
Q1: What is Notification No. 05/2019 – Integrated Tax (Rate)?
Answer:
It is a GST notification that brings development rights, FSI, and long-term land lease services under Reverse Charge Mechanism (RCM) when supplied to real estate promoters, effective 1 April 2019.
Q2: From which date is this notification applicable?
Answer:
The notification is applicable from 1st April 2019, as clearly stated in the notification.
Q3: Who is required to pay IGST under this notification?
Answer:
The promoter (builder/developer) receiving the service must pay IGST under RCM, not the supplier.
👉 Need help calculating RCM liability?
🔗 GST Compliance Services – Finodha
https://finodha.in/gst-compliance/
Q4: What is meant by Transfer of Development Rights (TDR)?
Answer:
TDR means the right given by a landowner to a promoter to construct on land in exchange for consideration (cash or constructed area).
Q5: Is FSI (Floor Space Index) treated separately under GST?
Answer:
No. FSI including additional FSI is explicitly covered under Entry 6B and taxed under RCM when supplied to a promoter.
Q6: What is considered a long-term lease under this notification?
Answer:
A lease of land for 30 years or more, whether consideration is paid upfront (premium/salami) or as periodic rent.
Q7: Does RCM apply even if landowner is unregistered?
Answer:
Yes ✅
RCM applies irrespective of registration status of the supplier.
Q8: Can promoter claim ITC on GST paid under RCM?
Answer:
ITC depends on the nature of project (RREP/REP) and output tax liability. In many residential projects, ITC may be restricted.
👉 Unsure about ITC eligibility?
🔗 GST Return Filing – Finodha
https://finodha.in/gst-return-filing/
Q9: What is meant by RREP under this notification?
Answer:
RREP means a Residential Real Estate Project where commercial area does not exceed 15% of total carpet area, as defined under RERA Act.
Q10: Is GST payable immediately on receipt of development rights?
Answer:
No ❌
GST is generally payable at the time of completion certificate or first occupation, as clarified by subsequent GST circulars.
Q11: Does this apply to joint development agreements (JDAs)?
Answer:
Yes ✅
Most JDAs involve transfer of development rights, making them squarely covered under this notification.
Q12: Is this notification applicable only to real estate sector?
Answer:
Yes. The entries specifically apply to real estate promoters and projects only.
Q13: What happens if GST under RCM is not paid?
Answer:
Non-payment leads to:
- Interest under Section 50
- Penalty under Section 122
- Possible GST audit issues ⚠️
Q14: Should promoters take separate GST registration for RCM?
Answer:
No separate registration is required, but RCM liability must be reported correctly in GSTR-3B.
👉 Register or update GST details with experts:
🔗 GST Registration – Finodha
https://finodha.in/online-gst-registration/
Q15: How does this notification help GST compliance clarity?
Answer:
It removes ambiguity by clearly fixing tax liability on promoters, ensuring uniform GST treatment across India 🏗️.
Download PDF: Notification No. 05/2019 - Integrated Tax (Rate)
More Information: https://taxinformation.cbic.gov.in/
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